What Is an Organization

At this point in a project management life cycle, we are performing the how planning activities to build the what that the customer wants. When we have the work breakdown structure (WBS) developed enough to represent the work to do, we can consider possible organizational breakdowns to get it done. But what is an organization, and why is this a big deal? It's a big deal because the wrong organizational structure can make managing the development project much harder than it has to be. It's like boating: Choose the wrong vessel for the situation, and you may work much harder to make progress - or, worse yet, sink! If you have a large crew and stormy weather ahead, then you most likely want a large, sturdy vessel capable of carrying a lot people, comfortably sheltered, with command and control all on the same ship, firmly planted on the bridge with the captain, in whose hands everyone's destiny lies. If there is good weather expected, a looser approach could be taken, using perhaps various smaller vessels in a loose flotilla, each with a captain, following general directions from existing navigation maps.

To get grounded in some basic organizational theory to help you understand the various organizational forms better, let's look at some classic organizational ideas and characteristics.

How Did Organizations Evolve?

Why do we have organizations in the first place? Aren't they all the same? No. Organizations go back thousands of years. Apparently, some form of organization was required to build the pyramids in Egypt and Central America. Family and military needs drove other types. Families generally had a household leader, who coordinated the agricultural work necessary to survive. Military rank-and-file organizations were developed to attack and defend. These were the seeds of the organizational forms that we see around us today.

In the Agricultural Age, the concept of a "project" was not well formed. Most production took place on farms or in small villages. Trading, and often any necessary integration, was done in marketplaces. With the invention of the steam engine, the Industrial Age dawned, and large machines began to dominate the production scene. This meant that workers no longer could stay on the farms, but had to collect at large places called factories to produce products. A managerial structure was required to control the activities of these largely uneducated workers. The most readily available structure was the military's, with its hierarchical chain of command. In fact, much of our current organizational thinking is hierarchical, derived from military structures (CEOs are like generals, VPs are like colonels, division heads are like majors, department heads are like captains, etc.). This may be why people at the lowest parts of an organization are often called the "troops".

Much of our current corporate structure comes from the heritage of Henri Fayol (1841 - 1925), a French mining engineer at the Comambault Co. in the late 1800s, and a German named Max Weber (pronounced vay-bur), among others. Weber (1864 - 1920) is considered "The Father of Bureaucracy". In reality, bureaucracy is derived from the German word for "management by the office" (as opposed to "by the person", which is patrimonial management), and it did not originally have the bad connotation we give it today. Fayol is credited with invention of many of the organizing ideas that we call the "principles of management". Fayol and Weber's "principles of management" are characterized as:

● Division of work;

● Centralization;

● Authority;

● Discipline;

● Hierarchical structure;

● Functionally oriented;

● Silos of specialty;

● Decision and promotion path that is vertical within a silo, with project activities divided by specialties and disciplines.

Organizing around these principles is why we generally have all the marketing people in the marketing department, the engineering people in the engineering department, and so on. At the turn of the century, most workers were illiterate, so all decisions in a specialty had to be made by management at ever-higher echelons and then passed down to the "troops" at the bottom, who were merely considered "cogs" in the machinery. This was okay because the world didn't change at Internet speed yet, and the troops really didn't have enough education to make very big decisions.

Around the turn of the 19th Century, a mechanical engineer named Fredrick Taylor began what came to be known as the scientific management approach. This was all about efficiency experts and time and motion studies. He spawned a number of disciples, such as Frank and Lillian Gilbreth of Cheaper by the Dozen fame, and Henry L. Gantt, who gave us the now famous Gantt chart. Later, their ideas of workers as "cogs" gave way to the concepts of productivity achieved through employee satisfaction and empowerment that we know of today. As the education level of the average worker grew, the need for hierarchical management faded, and, in the face of cost and poor-quality pressures in the 1980s, gave way to flatter organizations with fewer managers and less direct command and control. Instead, empowered teams emerged to make decisions at a lower level in the organization, across functional department boundaries. The matrix approach to management that emerged in the 1960s using cross-functional teams from the 1980s has become the most prevalent form of organization seen in project work today.

Are Organizational Styles Changing?

As we enter the knowledge economy of the Information Age at the turn of the 20th Century and things seem to move much faster (at Internet speed) than ever before, organizational styles continue to shift at an ever-faster rate. Figure 1 shows how the hierarchical forms of organization are shifting toward flatter, more loosely structured, team-based styles. You could say that there is a parallel here to the differences between classical structured programming on mainframes and object-oriented programming in client/server environments.

This illustration recognizes that there are both formal and informal organizations in existence in any situation. The formal one is expressed in the organization chart. The informal one is a web of relationships that usually crosses formal boundaries (the World Wide Web was aptly named and is a good metaphor for a peer-to-peer network that crosses formal organizational boundaries). The team-based organizational model is one in which members may belong to many teams with different goals. Hopefully, all the team goals achieve some strategic purpose set by the strategic apex of the larger organization. Some of these teams may be focused on improvement of ongoing operations or may be project teams focused on one-time project objectives. As shown in Figure 1, you can see how information flow could wind through the organization very quickly, as people carry information from one team meeting to another. This is the "grapevine" that seems to carry news faster than official company communiqus.

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